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Gold - double top reversal, eyeing neckline support of $1239?

Gold failed to take out the key resistance level of $1260 on Tuesday for the second time in the last ten days as the US stocks regained poise and the Dollar Index rose to a three-week high of 100.60 levels.

Focus on Fed minutes

Techies are already speculating about a potential double top reversal following Monday’s failure at $1260 levels. The bearish sentiment could strengthen if the Fed minutes due for release in the US session talk about a potential for sequential rate hikes this year.

Trump-Xi meeting

Investors will be closely watching Trump-Xi meeting on Thursday and Friday. Most of Trump’s allegations like China is a currency manipulator are outdated. President Xi is a staunch supporter of international trade, while President Trump has talked about US protectionism. The consensus in the market is that these two ‘polar opposites’ will have to come to common terms, given the strong interdependence.

Nevertheless, fears of trade war and the resulting caution could restrict the losses in the safe haven yellow metal.

The key US data releases - ADP employment report and the ISM non-manufacturing could turn out to be non-events in the markets ahead of the Fed minutes release and Trump-Xi meeting.

Conclusion of Trump-Xi meeting on a positive note, coupled with a neutral/hawkish Fed and strong wage growth figures could end up sending gold prices down to the neckline support seen at $1239 levels. On the contrary, heightened odds of trade war/protectionism following Trump-Xi meeting could single handedly push the yellow metal well above the key resistance level of $1261

Gold Technical Levels

The metal was last seen trading around $1256/Oz levels. A daily close above $1260 (recent high) would open doors for $1284 (March 2016 high) and $1300 levels (zero figure). On the downside, breach of $1247 (support on the 4-hour chart) could yield a sell-off to $1239 (double top neckline), under which a major support is seen directly at $1231 (50-DMA). 

 

Japan Markit Services PMI: 52.9 (March) vs 51.3

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USD/JPY: major risk events ahead, market remaining on-guard sub 111 handle

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